The 2023 Firmwide ESG Policy (the “Policy”) outlines Angelo Gordon’s (the “Firm,” “we,” or “our”) approach to integrating environmental, social, and governance (collectively, “ESG”) considerations in its investment process and strategies. We expect this Policy to evolve as the Firm continues to grow and to expand its business activities, and it is therefore subject to periodic review and revision by the Firm’s ESG Committee.

Commitment to ESG Integration

For over 30 years, Angelo Gordon’s investment approach has consistently relied on disciplined portfolio construction backed by rigorous research and a strong focus on capital preservation. Angelo Gordon is committed to investing responsibly and executes this commitment by incorporating material(1) ESG and reputational considerations into our investment management business and internal governance framework.  We refer to this as “ESG Integration.”

ESG Integration aligns with the Firm’s long-standing investment philosophy and its fiduciary responsibilities by capturing a broader spectrum of potential risk and value drivers and potentially enhancing risk-adjusted returns. We recognize that the impact material ESG factors can have on risk-adjusted returns may vary by strategy and asset class and, accordingly, we apply this Policy alongside the complementary ESG policies specific to each strategy.

Angelo Gordon is a signatory to the United Nations-supported Principles for Responsible Investment (“PRI”) and strives to uphold the PRI and demonstrate our commitment to ESG considerations by(2):

  • Instituting Firm-level sustainable governance and oversight processes for the management of material ESG factors;
  • Incorporating and assessing material ESG factors in the investment decision making process
  • and documenting those factors throughout the investment lifecycle, depending on the strategy and as applicable(3);
  • Building an ESG education program across all business units and geographies;
  • Seeking appropriate material ESG disclosures from investee entities;
  • Complying with relevant regulatory requirements and/or disclosures;
  • Engaging on ESG performance with operating partners, investment partners, and contractors in the Firm’s investment value chain, when appropriate and feasible;
  • Working with industry peers to further responsible investing and ESG integration principles; and
  • Reporting new ESG initiatives and progress to stakeholders.

(1) In this document, we are not using such terms “material” or “materiality” as they are used under the securities or other laws of the U.S. or any other jurisdiction, or as they are used in the context of financial statements and financial reporting. Generally, we consider material ESG factors to be those that the “reasonable investor” would consider relevant to the “total mix” of information when making an investment decision. The Firm’s investment professionals assess material ESG factors based on: 1) the probability that the factor will affect the performance of an investment and 2) the expected magnitude of the factor should it affect performance. We believe that materiality is dynamic and evolves as investor awareness and market pricing of ESG factors and trends accelerates. The assessment of material ESG factors remains at the sole discretion of the Firm’s investment professionals.

(2) This list is illustrative; not every action listed may be taken with respect to every investment or strategy.

(3) Due to the diverse nature of the Firm’s investment strategies and asset classes, the way investment professionals incorporate and assess material ESG factors into their respective decision-making processes varies by investment strategy, geography, and asset class. The Firm may make strategy-specific ESG policies available upon request. Policies and procedures are subject to change.

ESG Integration

Angelo Gordon’s investment professionals are trained to consider material ESG factors throughout the lifecycle of an investment. As with other investment risk factors, Angelo Gordon investment professionals use their discretion, within the relevant investment process, to determine which ESG factors are “material” when the investment is made or may become so during the holding period. ESG integration is owned by the investment professionals responsible for each investment strategy as we believe our investment professionals are best positioned to evaluate the ESG-related risk and value drivers within the context of their individual strategies and objectives. Depending on the investment, third-party data may be utilized to help assess ESG factors, but such data or third-party scoring metrics are not probative to AG’s analysis or ultimate investment decision-making. The Firm’s ESG Team collaborates with our investment professionals during the evaluation of material ESG factors, as necessary. It is important to note that the presence of one or more ESG-related risks will not necessarily preclude Angelo Gordon from making an investment; again, ESG factors are evaluated on the basis of materiality. Angelo Gordon’s ESG Integration and the resulting conclusions are initially documented as part of the formal investment decision-making process.(4)

Credit Strategies. The Firm became an affiliate member of the Sustainability Accounting Standards Board (“SASB”) in 2019, and the SASB approach to materiality forms the basis of our ESG Integration across our credit strategies. Our investment professionals refer to the SASB Navigator and supporting materials to guide them in identifying and assessing the impact that material ESG factors might have on the performance of an investment. Beyond SASB, our investment teams are empowered to identify additional ESG factors specific to their investments and to employ a strategy-specific approach to assessing idiosyncratic governance factors within the context of the relevant market, sector or asset class.

Real Estate Strategies. Historically, the Firm’s real estate investment teams have sought to mitigate ESG risks in their investment processes, particularly where the Firm has equity control of such investments.  Tenant demand for sustainable buildings and market pricing of ESG features is accelerating across real estate markets globally, and we believe our strategies are positioned to promote ESG factors, where possible, while creating financial value and enhancing risk-adjusted returns and honoring our commitment to our investors. As such, our approach to ESG Integration involves both mitigating risk and identifying opportunities for strategic ESG value creation during the holding period and upon exit.

While material ESG risks and value creation opportunities in the private real estate market necessarily vary by location and asset class, the Firm’s real estate investment professionals follow a standardized ESG integration framework in the dealmaking process. This includes ESG due diligence, incorporation of ESG considerations into the business plan formation, presenting underwritten ESG risks and value creation opportunities to the investment committee, and monitoring ESG factors and efforts throughout the hold period.

Arbitrage Strategies. The Firm has limited exposure to short-term merger and convertibles arbitrage strategies. The investment team has the ability identify material ESG factors throughout the holding period using an artificial intelligence-based ESG market sentiment and risk screening tool.

(4) For strategies or investments that do not submit Investment Committee memos, documentation relating to ESG integration may take other forms.

ESG Governance

Firm Management. Angelo Gordon’s co-CEOs are responsible for oversight of our ESG investing practices and the Firm’s corporate commitments to sustainability. Our ESG team reports to, and regularly meets with, the Firm’s General Counsel to discuss, among other things, progress on ESG integration objectives and ESG incidents that occur among investments across the Firm’s investment management platform. The General Counsel, in turn, discusses such matters with the Firm’s Co-CEOs and COO. The General Counsel also chairs the ESG Committee. The co-CEOs are responsible for reporting on relevant ESG matters to the Firm’s Partnership Advisory Board.

ESG Team. Our ESG Team collaborates with investment teams on the evolving design and implementation of ESG integration processes and is responsible for ESG training and education across strategies and advising teams on ESG market and regulatory trends and risks relevant to their strategies. The ESG Team is additionally tasked with developing and implementing processes for identifying and monitoring ESG risks at the portfolio level as well as at the Firm level.

Portfolio Managers & Investment Professionals. Angelo Gordon’s investment professionals are ultimately responsible for ensuring ESG factors are appropriately identified, assessed, and documented throughout the investment lifecycle. In partnership with the ESG Team, investment teams are also responsible for evolving their approaches to ESG Integration over time to capture current and emerging risks and value drivers within their strategies.

ESG Committee. Angelo Gordon’s ESG Committee oversees the integration of this Policy into investment and management decisions. The Committee consists of a representative group of portfolio manager-level investment professionals and leaders of key support functions, including Legal & Compliance, Client Partnership Group, Information Technology, Human Resources, and Communications. The Committee, which meets quarterly, serves as a strategic advisory forum for the development and communication of Firm-level and strategy-specific ESG integration initiatives. The ESG Committee also provides feedback to the Investment Committees or investment professionals if they raise ad hoc or investment-specific ESG questions or issues. The Committee serves as a mechanism for ongoing engagement with key ESG stakeholders across the Firm and champions both implementation and reporting of ESG initiatives across strategies and geographies.